2005 Social Security Backgrounder

Issue

The Social Security program helps ensure a minimum level of security for
all workers, their families, and persons with disabilities. Social
Security is most often thought of as a retirement program, but about
one-third of its beneficiaries are not retirees. Social Security
provides three different kinds of benefits for workers and their
families: lifetime retirement benefits for retirees who have worked at
least ten years, their spouses, and their children; disability insurance
for workers, their spouses, and their children; and survivors'
insurance for the families of deceased workers.

Social Security takes in money from payroll taxes paid by all workers
and their employers on all or a portion of their income, currently up to
$90,000. Historically, the money collected from payroll taxes would be
paid out in benefits to retired or disabled workers or their surviving
spouses and children. In recent years, this income has exceeded the
guaranteed benefits resulting in a surplus. This surplus was the result
of the expanded workforce made up of the large post-war baby boom
generation. In the coming years, these numbers may reverse themselves
as the baby boomers reach retirement age, resulting in increasing
numbers of beneficiaries and decreasing numbers of workers contributing
to the system. This imbalance and fear of a shortfall are what
continues to drive the current debate about if and how to reform Social
Security.

At the end of December 2003, Social Security provided monthly benefits
to 47 million beneficiaries (or one in every 6 Americans). Social
Security paid a total of $471 billion to retired workers, disabled
workers, and to the surviving family members of deceased workers in
2001. In 2002, Social Security beneficiaries included about 3 million
children under the age of 18.

USCCB Position

In May 1999, the Administrative Board of the U.S. Catholic Conference released: A Commitment to All Generations: Social Security and the Common Good.
In this statement, the bishops recognized that the Social Security
program is the largest and one of the most successful social programs in
the United States because it offers an effective, dignified way for
Americans to honor their obligations to the elderly, persons with
disabilities, and their dependents.

The statement identifies five key criteria which USCCB will use to evaluate reform proposals:

Changes in Social Security should not put at risk those individuals and families whose resources are already very limited.

The disability and survivors’ portions of the Social Security
program should remain linked to the retirement portion to ensure
continuity of commitment to workers and their families in cases of
disability and death.

Any changes made in the tax structure should be weighed in
favor of the poor. Those with lower incomes should bear less of the
total Social Security tax burden than those who are more affluent.

Benefit inadequacies with respect to the benefits received by some women should be remedied.

Principles of equity and concern for the common good support
bringing employees from all sectors of the economy into the Social
Security program.

Action

The President has made reforming the Social Security system a high
priority. There is much discussion and debate over the merits of the
system and its short and long term viability. Among the proposals being
discussed are changes to the payroll tax structure, retirement age, or
the rate of benefits. The provision in the President’s proposal that is
currently receiving the most attention is the establishment of private
accounts by which younger workers would have the option of investing
part of their payroll tax into the stock market in the hope of a higher
return at retirement.

As of this writing, most of the proposals, including the President’s
have not been put into legislative language. USCCB staff will be
studying these proposals as they are fleshed out and applying the
criteria in A Commitment to All Generations to legislation. In
the broader debate, we will focus on how the proposed changes touch poor
families and individuals and people with disabilities. Our particular
priority will be continuing the guarantee of Social Security, especially
for those who rely on it for basic income support.

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